A Texas-based mortgage lender and property developer is charged with specifically targeting the Hispanic community in the Houston region by making loans to borrowers who are unable to repay them, selling them dilapidated land, and abusing language hurdles.
In a federal lawsuit filed on Wednesday, prosecutors claim that Colony Ridge Development, LLC, and its subsidiaries engaged in a predatory lending scheme in which foreclosures were a component of the business plan.
The Justice Department filed a lawsuit against the developers on Wednesday, spanning over 40,000 lots over 33,000 acres. This marked the first attempt by civil rights prosecutors to address predatory mortgage lending in the United States.
Tens of thousands of Hispanic potential buyers were reportedly seduced into buying land from Colony Ridge by specifically targeted Spanish-language advertisements on TikTok and other social media sites, according to investigators. According to the civil complaint, some of the marketing material misrepresented that the land had utility connectivity when in fact it did not, and other land that was sold was vulnerable to flooding and raw sewage runoff.
The Consumer Financial Protection Bureau, according to a statement from Loan Originator Services, which is named in the lawsuit, “appears to be uninformed regarding the applicable law regarding land sales, as well as the facts surrounding Loan Originator Services’ involvement in these land sales.” The company said it “looks forward to explaining why these land sales are legal and appropriate for customers” and expressed confidence the lawsuit would be dismissed once the government “comprehends what actually occurred.”
Prosecutors and federal regulators alleged the predatory lending scheme outlined in court documents violates federal law and said they are warning members of the community of the allegations.